US Gross Domestic Product Shrinks 0.9% in Second Quarter as Investment Slumps

[MongiIG]

Jul 28, 2022 | DailyFX
Diego Colman, Market Analyst

US GDP KEY POINTS:

• U.S. gross domestic product contracts 0.9% on an annualized basis in the second quarter, following a 1.6% decline in the first three months of the year
• Two consecutive quarters of negative GDP growth is informally called a technical recession, but the government has a broader and more comprehensive definition
• The deteriorating economic outlook may lead Federal Reserve officials to adopt a more dovish stance in the coming months to avoid a significant downturn

The U.S. economy failed to rebound and posted another contraction in the second quarter due to a rapid cooling of household consumption and steep drop in investment, a sign that the outlook continues to deteriorate amid mounting headwinds, including four-decade high inflation, and tightening financial conditions. According to the Commerce Department, gross domestic product, the broadest measure of goods and services produced by a nation, shrank 0.9% on an annualized basis, following a 1.6% drop during the first three months of the year. Analysts polled by Bloomberg were expecting a 0.4% increase in real GDP.

 

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